Trustees pick Shands/HMA to run Munroe

Published: Thursday, April 18, 2013 at 11:36 p.m.

Last Modified: Thursday, April 18, 2013 at 11:36 p.m.

Hoping to solidify Munroe Regional Medical Center's tenuous financial footing, the hospital's trustees on Thursday chose Shands/Health Management Associates to run the hospital for the next 40 years.

The Marion County Hospital District Trustees voted 6-1 to begin negotiating a lease with Florida-based HMA for the publicly owned 421-bed hospital. HMA has offered $214.2 million to lease the operation, about $31 million more than North Carolina-based Duke LifePoint. Dr. Kenneth Marino was the sole trustee to vote against the HMA offer.

The vote came after the trustees' Munroe's Strategic Options Work Group, which had spent 18 months searching for suitors to run the hospital, recommended HMA on a 7-4 vote. The Work Group was comprised of doctors, hospital board members and Hospital District trustees.

“If there's anything I have gotten out of this is how strongly the people feel about Munroe,” said HMA Senior Vice President Alan Levine after the vote. “That's a huge responsibility for us.”

The debate Thursday over the best company to lease Munroe centered on two key questions. One was about which company would maintain the array of services and standard of quality to which the hospital's patients have become accustomed. The other was which company made the best financial offers.

In the financial arena, HMA was the heavyweight, with a cash offer to trustees about $31 million higher than the one Duke LifePoint made. Duke LifePoint Healthcare's cash offer to the trustees was $182.9 million; Shands/HMA's offer to the trustees was $214.2 million.

If the negotiations are successful, the trustees are expected to create a foundation and use the money to fund health care-related programs throughout Marion County. The consultant hired to help in the lease process was Chicago-based Ponder and Company.

HMA will also lay out $284.1 million for improvements to the hospital over time.

The meeting Thursday followed a last-minute offer by Duke LifePoint Monday to up its offer about $30 million.

HMA stuck with its original, higher offer but said that as part of joining the Ocala community, it would make a $1 million contribution to the local nonprofit Interfaith Foundation and another $500,000 to the Munroe Regional Medical Center volunteer organization.

Trustee Larry Strack said he supported the HMA offer because the Naples-based company had a larger presence in Florida, with 22 hospitals, and a strong partnership with Shands.

Strack was concerned that Duke Medical Center's primary focus would be in its home state of North Carolina and that Tennessee-based LifePoint may never be able to expand its smaller number of Florida hospitals.

“Shands has served Marion County going on 60 years. How many people have had their lives saved by Shands?” Strack said. “How can we turn our backs on an opportunity to (create a partnership) with Shands?”

But Work Group member Dr. Harvey Taub said Shands has been more of a competitor with Munroe for patients and that may not change with a Shands/HMA lease.

Taub said although Shands has made new promises to help Munroe in treating patients who need more specialized care, there still remains a high level of mistrust by Munroe doctors.

Work Group member Brian O'Connor agreed, saying Shands showed “almost an arrogance” toward Munroe and its doctors and that it would be a “difficult and long road” in fixing that rift.

Work Group member Dr. Mel Seek said Duke LifePoint's health care culture was more compatible with Munroe and that Duke would be better suited to expand Munroe's service lines and focus on community health issues.

But trustee Dr. Mike Jordan said he wasn't convinced that either of the two companies were a better cultural fit.

“Can you really detect in your mind a firm distinction between the two?” Jordan asked Seek.

Although health care culture was much discussed by both companies, Jordan said, “in realty, it's all verbiage.”

Jordan also said that with HMA having many more hospitals in Florida than LifePoint, HMA would likely have more political pull in Tallahassee.

Munroe is owned by the state-sanctioned Marion County Hospital District and is overseen by seven trustees who are appointed by the County Commission.

The trustees lease the hospital to Munroe Regional Health System Inc., which is overseen by a 13-member board, some of whose members also are district trustees.

Without property tax support — a ballot measure failed in November — Munroe leadership says it must lease the hospital to a separate company to invest and keep the hospital competitive.

Once trustees lease the hospital, they plan to oversee the lease payment, using it to fund community health issues and initiatives.

HMA is partnering with Shands at the University of Florida in its offer to lease Munroe. Shands has no financial stake in the HMA partnership but can buy into one later. In a last-ditch effort to calm fears about Shands not having a financial investment and no clear interest in Munroe's success, Shands CEO Tim Goldfarb said his board has agreed to buy as much as a 20 percent stake in the Shands/HMA/Munroe lease.

Under the proposed Shands/HMA deal, Shands would develop a written agreement with Munroe to accept any of its patients sent to Gainesville by a Munroe doctor.

For trustee David Cope, the question was which company could best position Munroe to compete with Ocala Regional Medical Center across the street. Ocala Regional is a Hospital Corporation of America facility.

“I believe to have the strongest competitor (will allow Munroe) to best compete with HCA,” Cope said. “I think HMA is the right fit to compete with HCA across the street.”

Contact Fred Hiers at 867-4157 or fred.hiers@starbanner.com.

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